This paper offers conjectures with respect to four questions:  

  1. What would an extra-terrestrial intelligence (ETI) [1] make of the current state of development theory? 
  2. How would the ETI describe the G20 consideration of development?
  3. Given the cultural diversity within the G20, what are the prospects for a “Hangzhou Consensus” on development?
  4. Can the G20 help rescue the 2030 Sustainable Development Goals (SDGs)?

An independent observer’s assessment of the debate on development would first note the decades-long list of declarations, action agendas and financing for development conferences. The review would highlight the different cultures of negotiation and decision-making in China and the United States, the two “first among equals” in the G20. This paper explains how an ETI might reconcile the development models of the two apparently incompatible cultures. On this basis, the paper concludes with suggestions of G20 initiatives that may help salvage the 2030 SDGs. 

1. An ETI View of Development Theory

An ETI would be unimpressed with progress on development. It would agree with Manuel Montes that the July 2015 Financing for Development Conference exposed “the waning state of multilateral development cooperation today." As Montes noted, even though the outcome "was nevertheless grandly called the ‘Addis Ababa Action Agenda,’ there were no new commitments and no proposed actions that can properly be deemed responsive either to (1) the flimsy state of international financing today or (2) the financing requirements of the UN’s new development agenda.”

Montes suggested that the most concrete promises that are possible today are only those that merely start up other intergovernmental processes. [2]

An ETI would observe that two development paradigms dominated the history of the development discourse -- the Washington Consensus [3] and the more recent Beijing Consensus. The Washington Consensus -- currently on life support -- proposed a reduced role for the state:

  • Fiscal discipline -- strict criteria to restrict the size of budget deficits.
  • Financial liberalization -- interest rates should be market-determined.
  • Privatization of state enterprises.
  • Deregulation, abolishing regulations that impede the entry of new firms or restrict competition.
  • Trade liberalization.
  • Public expenditure priorities -- moving them away from subsidies and administration toward previously neglected fields with high economic returns.
  • Tax reform -- broadening the tax base and cutting marginal tax rates.
  • Competitive exchange rates.
  • Increasing foreign direct investment (FDI) by reducing barriers.
  • Secure intellectual property rights (IPR).

The “Beijing Consensus … is more slippery [than the Washington Consensus]; there is no consensus as to what it stands for.” [4] John Williamson suggested five pillars [5]:

  • Incremental reform. “Groping for stones to cross the river”... seek modernity by incremental change rather than through committing all on a “big bang” designed in abstract and imposed from above.
  • Innovation and experimentation.
  • Export-led growth. Rely on a large current-account surplus as a source of demand to drive the economy.
  • State capitalism. No pretense of central planning. Resources obtained via purchase at market prices. State-owned enterprises (SOE) advantaged by soft budget constraint being preferred customers of the many state-owned banks.
  • Authoritarianism. The ideal is the collective good of the community. Preserve disinterested policymaking insulated from special interests. Internationally, support national sovereignty irrespective of the decisions implemented or the characteristics of the regime in power.

Autocratic African leaders, apparent converts, “love the flow of aid from China that comes without Western lectures about governance and human rights.” [6] An ETI would note the controversy surrounding the Beijing Consensus – its purported success in generating China’s growth may be based on a misunderstanding of Chinese statistics:

“… when measured by factors that directly track the living standards of the average Chinese person, China has performed the best when it pursued liberalizing, market-oriented economic reforms, as well as conducted modest political reform, and moved away from statist policies.” [7]

This interpretation is that China’s economic development strategy is untenable; the strategy suppressed the country’s potential of internal final consumption to ramp up production capacity, and that rebalancing requires reversion to a more liberal package of reforms characteristic of the 1980s. The root cause of under consumption in China is ascribed to the development strategy based on economic statism. [8]

2. An ETI view of G20 Actions on Development

An ETI would be first surprised that the critics of the G20 record have been so pitiless:

  • Robin Davies, Australia’s representative on the G20 Development Working Group in 2010 and 2011 described the effort as “invertebrate, flabby and toothless”; “diffuse, lacking a coherent narrative and disconnected from the central concerns of G20 leaders and finance ministers.”
  • Susan Harris Rimmer of Australian National University described its Multi Year Action Plan as ‘fractured, diffuse, mostly divorced from the overall G20 framework, peripheral to leaders’ declarations, badly communicated to civil society and often opaque to external scrutiny.”
  • Andrei Bokarev, the Russian Chair of the 2013 G20 Development Working Group noted it was “not always clear what G20 is doing … what concrete steps and decisions have been taken, what particular results it has helped to achieve.”

But then the ETI would agree the harsh criticism seems to be justified by the vacuous nature of the most recent report of the G20 Development Working Group. [9] The report, filled with empty euphemisms, is without a single verifiable substantive comment:

  • “Agreed to an Accountability Framework”;
  • “... stronger linkages have been established with the finance track”;
  • “… developed the G20 Inclusive Business Framework.”

An ETI would wonder if being from another planet was the basis of its puzzlement.

3. Cultural Diversity and Prospects for a “Hangzhou Consensus”

Cultural differences

An ETI would observe that prospect of any G20 agreement is constrained by significant cultural differences between Asians and Westerners. Cultural differences prevent shared understanding and plague the search for mutually satisfactory outcomes in foreign policy. Distinct Chinese and American approaches to negotiations bedevil attempts to reach consensus.

As Donald Rumsfeld observed “All generalizations are false … generalizations are generally wrong, including that one” [10]. For example, as Joseph S. Wu put it, “Chinese culture is so substantive in content, so comprehensive in varieties, and has had so long a history, that to its outsiders, it is very similar to the elephant before the blind men in the ancient story. The blind men could not grasp the elephant in its entirety. They held onto some part and from this vantage point they attempted to describe the whole animal."

Generally, aside from individualism versus communitarian values, there are major cultural differences in negotiating style. Asians emphasize relationship building, trust and handshake agreements while impatient Westerners value legal contracts. Westerners are direct; Asians are more subtle. In terms of the importance of relationship building and trust contrasted with the Western dependence on contracts, an ETI would be astonished to learn that on a per capita basis in the United States there are 24 times as many lawyers as in China (there were 1.6 lawyers for every 10,000 Chinese in 2013. There is one lawyer for every 265 Americans [11]).

Asians are subtle; Westerners are direct. “Westerners are all about being straightforward and direct. But, when you negotiate a deal in China, it’s all about what is unsaid, simultaneously hiding and hinting at what you really want.” [12]

Recall Sun Tzu’s advice: "Be extremely subtle to the point of formlessness; be extremely mysterious to the point of soundlessness. Thereby you can be the director of the opponents’ fate."

In contrast, note Sylvia Porter’s report, in the New York Post:

“I have watched with amazement the bluntness with which the US has declared its power and said in effect to the delegates here: America is the superior financial and economic country of the world ... make no mistake about one thing. We’re tops in this bank and fund and we want everybody to know it.” [13]

The ETI would observe that to reach agreement, the G20 must reconcile four cultural differences:

  • Asians’ long-term time horizon and patience [14] versus Western "short-termism" and obsession with quarterly results.
  • The Chinese principle of non-interference versus the American predisposition on conditionality, proselytization, and missionary zeal.
  • Western altruism versus the Asian tradition of mutual assistance.
  • The Western stress on conditions to allow a flourishing private sector versus the Asian priority of focus on public goods.

A G20 consensus must therefore finesse disagreements on time horizon, conditionality, altruism, and the role of the private sector.

The ETI was aware that cultures are not homogeneous. It noted the contrasting views of punctuality between Latin Americans and Europeans and between Japanese and Chinese. It was amused by the joke:

“When a Spaniard was asked to explain what “mañana” meant, the response was that the term means “Maybe the job will be done tomorrow, maybe the next day, maybe the day after that. Or perhaps next week, next month, next year. Who really cares?” An Australian aboriginal asked if there was an equivalent term to “mañana” in his native language, replied, “In Australia, we don’t have a word to describe that degree of urgency.”

But the ETI also understood that generally there is a significant different perception of the concept of time. Westerners “view time as linear – from today, through tomorrow, and into future. … However, in China, time is viewed as polychromic and circular where the present is connected to the past.” [15] Recall the often-cited response that it was premature to assess the impact of the French Revolution. [16] Hu Jintao’s focus for the success of policies and projects was characterized as a 60-year horizon focused upon the greater national good, assuming the long view and leaving room for trial and error. [17] Confucius is often quoted to have said, “The man who moves a mountain begins by carrying away small stones.” The Chinese view accountability through the lens of the generation; the US businessman is accountable by the quarter, with the emphasis on quarterly profit statements.

Cultural differences plague debates about conditionality in development assistance. Asian ethnic culture is centered on relationships; people are reclusive, each minding his or her own business (especially with "strangers" and people outside of the relationship network). Western ethnic culture is centered on the individual; people subscribe to ideas like manifest destiny with a "Messianic: let's save the world” outlook. [18]  China preaches non-interference. Western prescriptions are perceived as paternalistic and intrusive.

“Mutual assistance” is the Chinese mantra to explain the basis of a relationship. The idea of “gift exchange” is interpreted as corrupt bribery in the West [19]. With respect to official development assistance, the Japanese believed that loans were a more appropriate instrument than grants, that the disadvantage of the burden of repayment was dominated by the advantage of instilling a sense of ownership and responsibility. Many Chinese would conclude that only extraordinarily rich or foolish people would disavow “tied aid.” Altruism is perceived as naïve.

The respective roles of the public and private sectors are matters of dispute. In China, the communitarian tradition privileges the role of government. In the West, there is a fundamental disrespect for government -- witness the definition ascribed to Ronald Reagan: “Government is like a baby: an alimentary canal with a big appetite at one end and no sense of responsibility at the other.”

Reconciliation of cultural differences

The ETI wondered if G20 can devise a modern effective development paradigm. The G20’s attempt in 2011, the Seoul Action Plan with nine pillars, was criticized for having too many elements. [20] It was also faulted for inadequate attention to the need for an empowered government. A development concept must emphasize the intrinsic interdependence of economic growth and development and reconcile the cultural differences listed above.

The existing G20 emphasis on infrastructure investment resolves the tension on time horizons -- since all agree that infrastructure investments must be evaluated and amortized over many years. Compromise can be reached on conditionality if the conditions are on policies to fight corruption, tax evasion and environmental pollution. The tension between altruism and “mutual assistance” is finessed if joint equity investment becomes the favoured mode of financing development projects. The notion of public-private partnerships reconciles disputes about the role of state owned enterprises versus the private sector. Differences between guanxi and the legalistic approach can be squared by an emphasis on local customs and local ownership. Westerners will be comforted if this is combined with a high priority on anti-corruption.

4. Can the G20 help rescue the 2030 SDGs?

A Hangzhou Development Consensus

 

Western culture

Asian Culture

Hangzhou Consensus

Time horizon

Short term; Quarterly results

Generational; Five-year plans

Infrastructure

 

Conditionality

 

Detailed stipulations

 

Non-interference

Anti-Corruption

Taxation Capacity

Invest in Environment

Motivation

Altruism

Mutual Assistance

Investment: Joint equity stakes rather than grants

Role of government

Private Sector

State-Owned Enterprises

Public-Private Partnerships

Focus on Cities

Basis of Agreement

Legal written contracts

“Guanxi”;

relationships; trust

Acknowledged need for

local ownership

 

Then a G20 “Hangzhou Development Consensus,” building on current G20 priorities and evidence of successful development, could be composed of several elements [21]:

  • Infrastructure: The problem in development policy is where to start. Literacy? Education? Healthcare? Security? Safe water? Food security? All goals are equal but one is more equal than others. A focus on infrastructure reconciles the different orientation towards time horizons. China has selected infrastructure as the place to start. It is the enabler for “connectivity” roads, airports, ports plus electrification and information and communication technologies. Western governments currently seem to agree that macro-economic policy inspired economic stimulus spending should emphasize infrastructure investment. Westerners accept that infrastructure must be amortized over long periods of time. Note the Brisbane initiative of the “Global Infrastructure Hub.”
  • Anti-corruption Priority: Ruthless treatment of corruption is a necessary ingredient for provision of cost effective government services and for success in large infrastructure projects. There is universal agreement about the emphasis on anti-corruption.
  • Effective Tax Collection Capacity: Governments require the means to discharge its responsibilities, deliver services, and effect redistribution.
  • Investment in Environment: Sustainability requires a long time horizon and patience (two Chinese virtues) instead of short-termism and an impatient focus on quarterly returns (a Western shortcoming).
  • Joint Equity Model: Western altruism (with conditions on local policies) must be reconciled with the gift exchange model of Chinese culture. The concept is for mutual assistance (virtue and mutual benefit), rather than an unbalanced paternalistic approach. Conditional procurement is not pejoratively referred to as “tied aid.” Grants are replaced with financing including joint equity arrangements.
  • Public Private Partnerships (PPPs): Conservative and libertarian circles in the West object in principle to government involvement despite lower capital costs of state-owned enterprises, which tend to focus more on public goods than profit. However, a new consensus could address the objections by framing state involvement as PPPs, the Western flavour-of-the-month. The concept has gained favour in response to inadequate capital availability in deficit-ridden Western governments.
  • Local Ownership: Smart Cities is one place to start - to exploit the potential of the digital economy. Urbanization is another potential focal point - it is more effective to bring people from remote areas to centres of productive employment with education and health facilities, than to bring modern infrastructure and employment opportunities to remote small towns and villages.

 

The 2030 SDGs are likely to be ineffective, despite all the good intentions and the massive consultative effort. The SDGs have 17 goals and 169 targets. The Economist characterized the result as “Something for everyone has produced too much for anyone. Making matters worse, some developing countries [erroneously] think each extra goal will come with a pot of money, so the more goals, the more aid.” [22] David Cameron noted there are “too many to communicate effectively," adding, “There’s a real danger they will end up sitting on a bookshelf, gathering dust.” [23] While some of the criticism is overblown, [24] perhaps something constructive can be salvaged.

There are two avenues by which the G20 can support the implementation of the 2030 SDGs. It can rally efforts by promoting a “Hangzhou Consensus” on development, presenting a coherent paradigm congruent with foundation elements of both Western and Asian culture. Second, it can focus on priority instrumental goals that are means to attain the aspirational goals.

The G20 mantra is “Focus, focus, focus” -- do not dilute the agenda. Then the most helpful contribution the G20 can make is to concentrate its efforts on two or three goals that deal with means of implementation rather than ends. There is no need to compete with the UN in framing aspirational goals such as poverty, food security, health, education, gender equality, reduced inequalities and sustainable cities.

As the “premier forum” for their international economic cooperation, the G20’s modes of action are, statements for the record pledging to put domestic affairs in order, committing to specific actions or to mobilize resources in international institutions; commending approaches to international organizations; inviting reports to future G20 meetings; establishing Working Groups of G20 Ministers or officials; and establish new international organization. There are several examples where the G20 has attempted to strengthen international institutions -- Goal 16 -- by increasing resources or augmenting mandates (the IMF) or by creating new entities (the Financial Stability Board and the Global Infrastructure Hub). One candidate would be to support the SDG’s energy access and climate action goals by establishing a new entity, built on the 2015 G20 commitment on Mission Innovation [25], modelled on the Consultative Group on International Agricultural Research [26]. The key in a new Consultative Group on International Energy Research (CGIER) is that the increased investment in energy R&D would be spent inside the countries that fund the research, but that the research results would be patent-free to countries that sign on to the initiative. 

Another option is to support the SDG Innovation and Infrastructure Goal. The G20 can help secure the future promise of the digital economy by building consensus on future Internet governance. In Antalya, G20 Leaders committed themselves to bridge the digital divide, to oppose ICT-enabled theft of intellectual property, and to respect and protect digital communications privacy. The G20 could commission a report on “The Internet and Growth,” assessing initiatives to promote development by improving Internet security as well as affordability, accessibility, inclusivity, infrastructure, and human digital capacities. The report could provide options for the G20’s potential coordination and catalytic roles.

Conclusion

If the ETI were to advise the Chinese G20 Presidency how to support the 2030 Sustainable Development Goals, it would reiterate the G20 priority of economic growth and the necessity of “focus.” The ETI, educated as an economist, would believe that “if everything is a priority, nothing is a priority” and would recommend a limited number of initiatives. Three suggestions:

  • The G20 could reinforce the SDGs by promoting a “Hangzhou Consensus” that reconciles Asian and western values and world views, emphasizing common elements and shared beliefs.
  • The G20 could also support climate and energy goals and strengthen the international institutional system by establishing a new entity to promote clean energy research and stimulate the sharing of results.
  • The G20 could secure the future promise of the digital economy by initiating a process to reach consensus on governance of the Internet, to deliver security as well as innovation and economic growth.

If the G20 accepted these ideas, the ETI would conclude its long trip and cultural study was well worthwhile, but would still want to go home. 


[1] Coming, say, from the planet Kepler-186f.

[2] Montes noted “the most important outcomes of the conference….are two new processes:  a proposed technology facilitation mechanism and a follow up mechanism in the Economic and Social Council to monitor progress on financing for development issues… plus another process decision to set up a global infrastructure forum and a call to reduce illicit financial flows in an outcome officially intended to revitalize the global partnership for development.” http://www.southcentre.int/wp-content/uploads/2016/03/PB24_Five-points-on-Addis-Ababa-Action-Agenda_EN.pdf

[4] Andrew Leonard, citing the term coined by Joshua Ramo, http://www.salon.com/2006/09/15/beijing_consensus/

[5] John Williamson, “Is the ‘Beijing Consensus’ now Dominant?” Asia Policy, Number 13, January 2012, pp. 1-16

See http://www.economist.com/node/16059990

[10] Rumsfeld continued “It's important, I think, to recognize texture and dimension in things.”

http://www.usnews.com/opinion/articles/2013/06/04/donald-rumsfeld-explains-the-rules-that-guide-him 

[12] Cho Weymi Quoted by Fan Jiayang, New Yorker Feb 22, 2016

[13] New York Post, recounting the inaugural IMF meeting in Savannah, March 1946

[16] But http://www.markpack.org.uk/38813/zhou-enlai-mao-tse-tung-impact-of-french-revolution/  This makes the point about the perils of translation. “Words do not have twins in every language. Sometimes they have only distant cousins, and sometimes they are not even related.”(Monique Truong).

[19] One manifestation is the disagreement whether loans or grants are the appropriate of assistance.

[20] Infrastructure, private investment and job creation, human resource development, trade, financial inclusion, growth with resilience, food security, domestic resource mobilization and knowledge sharing

[21] Seven is too many – but the analyst must provide a menu from which the decision makers can choose.

[24]Such as the headline: “The United Nations 2030 Agenda decoded: It's a blueprint for the global enslavement of humanity under the boot of corporate masters” http://www.naturalnews.com/051058_2030_Agenda_United_Nations_global_enslavement.html#ixzz42ui8uM5U

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